Kicking off a heavy week for economic statistics, the rate at which manufacturers' costs are growing is expected to have slowed again to around 7 per cent in November, although analysts do not think the month-on-month drop in October will have been repeated. Further along the inflation pipeline, prices charged by producers at the factory gate are expected to show a small rise, taking their annual rate of increase a shade below October's 4.6 per cent.

TOMORROW

Companies

Northern Electric's results are unlikely to hold any surprises on the dividend front following the aggressive defence package announced earlier this year in the wake of the bid from Trafalgar House. Profits will be down because of the effect of two reviews of the electricity distribution price control by the regulator, Offer, but earnings per share will be buffered by a reduction in the average number of shares. Pre-tax profits are expected to be about pounds 52.4m and earnings per share 39.6p. The company is the most highly geared in the sector as a consequence of the bid.

The key event of the economic week is the monthly monetary meeting between the Chancellor of the Exchequer and the Governor of the Bank of England. Financial markets have priced in a quarter point cut in base rates, although City economists reckon there is only a 50-50 chance of this happening. The Chancellor will give evidence on the Budget and the economy to the Treasury Select Committee.

November figures for retail sales, unemployment (for November) and average earnings (for October) are also due. City analysts expect a reasonable increase in retail sales, following last week's buoyant CBI survey of the high street. After a small rise in unemployment in October, a small fall is expected for November - and possibly the revision of the previous month's increase.

THURSDAY

Companies

Asda Group is expected to announce half-year pre tax profits up 22 per cent to pounds 135m and an increased dividend up 21 per cent to 2.69p. Sales growth should grow 13 per cent, marking the peak in the Asda sales growth cycle, while underlying costs will only go up by 1 per cent, thus driving future operating margins ahead.

Southern Water is the last water company to announce but unlikely to disappoint. The company is expected to clarify its plans for balance sheet restructuring.

Retail prices are expected to show a rise in November after the unexpected fall in October. The market view is that the target inflation measure, the RPI excluding mortgage interest payments, will stay around October's 2.9 per cent rate, above the 2.5 per cent target. The Bundesbank council meets for the last time before Christmas. A quarter to half point cut in key rates is likely, but perhaps not until the New Year.

Wrapping up the week, the CBI monthly trends survey for December is likely to confirm the weakness of the manufacturing sector. Analysts are keeping an eye on the rising balance of firms expecting to raise prices, although some of the recent upward trend is seasonal.